The evolution of household living and spending patterns is inescapably linked to the evolution of industries and occupations.
New industries emerge almost totally as a result of outsourcing; a case of converting at-home, do-it-yourself (DIY) activities to an industry on a do-it-for-me (DIFM) basis. Giving up growing food led to our agricultural industries. Giving up making clothes, furniture and preserving food led to our manufacturing industries.
Over the past half-century or more, we have been giving up our household service activities, which has created new service industries with revenues of over $520 billion in 2021.
This outsourcing has led to us spending 94% of our income–saving just 6% of it–on such outsourced goods and services by 2020, as shown in the chart below.
This chart shows how outsourcing has led to efficiencies in industries that have given us cheaper and cheaper goods—down from roughly 62% of incomes to 20% some 120 years later. However, the bulk of our spending is on services these days—indeed, 74% of all spending, including taxes, which come back to us as services.
And yet, we still produce goods and (mainly) services at home that are valued at well over $600 billion on a DIY basis. So, outsourcing these activities offers strong growth potential for existing and new service industries in the future.
The post-industrial age trend of businesses also outsourcing their non-core functions and activities offers further potential. This trend is already responsible for over $750 billion of industries’ revenue in 2021. And, again, plenty of new outsourcing may develop in the decades ahead.
This outsourcing, coupled with new technologies such as electricity and telecommunications, has led to equivalent changes in the relative importance of industries within our economy. In this case, we have gone back much further in history (220 years) and had a stab at 30 years from now in 2050, as shown in the chart below.
The message is similar to the pattern in household spending. The nation’s economy is now dominated by service industries, which account for around 70%, or more, of GDP. The economy will likely continue in that direction, with strong growth forecast in health, administration and support, hospitality, telecommunications (Digital Era) and other service industries.
It will therefore be of little surprise to know our occupations are changing too, as shown in the chart below.
The time frame shown above is much shorter than in the previous chart, but is still long enough over three decades to highlight the shrinking relative importance—although, not necessarily the numbers—of older occupations such as labourers, clerical and administration occupations, technical and trade jobs and machine operators.
Indeed, change never stops.
